How to Start Saving Money When You’re Broke

If you’re struggling to save a few bucks each month, you’re in good company. About a quarter of Americans say they have less than $1,000 to cover an emergency according to a Prudential survey of full-time employees. Between student debt, rent, and your cell phone bill, saving for big goals like buying a house or car can seem like a pipe dream.

But don’t give up just yet. The trick to getting started is to focus on what you can do, not what you can’t. “The point of saving, even if it’s just a few dollars, is to start building the habit,” Erin Lowry, the personal finance expert behind Broke Millennial, says. You may not be able to save $10,000 this year, for example, but there’s a good chance you can save $100 or even $1,000.

If may feel like your landlord and Sallie Mae are swallowing your paychecks whole, but there are ways to start squirreling away a few bucks at a time. The key is taking a clear-eyed look at your spending, having a willingness to change, and understanding that saving is the ultimate self-care.

Decide no amount is too small

You don’t have to get a big raise or commit to an austere budget to start saving. “Pay yourself first. I don’t care how broke you are… I don’t care how much debt you’re in,” says Frank Byrd, chief investment officer at Fielder Capital in New York City.

How do you do that? Start by setting as little as $5 a week aside and putting it in an interest-earning savings account separate from the checking account you use to pay bills. Just putting your savings in one place can motivate you to add to it since you can watch your efforts pay off.

When it comes to retirement savings, don’t be overwhelmed by how much you “should” be saving. Focus instead on what you can save. If you’re taking a percentage of your pre-tax earnings out of your paycheck, no amount is too little: “I have always said, start at one percent. You’ll get in the game,” Ted Benna, creator of the 401(k), told NPR in June.

Making saving a creative challenge

Once you’ve made saving a habit, look for more ways to set money aside. If you live in a city, take public transportation instead of ride share services to save at least $10 a ride. Try packing a lunch a few days to save another $25 a week or more. Cut out a magazine subscription, streaming service subscription, and that gym membership you no longer use to save another $100 or so a month.

New York City banker Jade Liou learned both from the 2008 downturn and her own lean years paying her way through graduate school that every $5 counts. “I would actually go to three separate grocery stores to buy things and it would save a few bucks a week,” she says. When it came to transportation, “If I could walk, I would do it instead of taking the subway everywhere. I generally didn’t take cabs at that time. This sounds like a lot of work but it saved me a lot of money.”

Your social life doesn’t have to disappear, but it will definitely evolve. Zina Kumok, the personal finance blogger behind Conscious Coins recalls how during the recession, “I would try to skip going out to eat or going out to the bars and stuff. So it was a lot easier when I was like, OK, we’re just going to hang out at someone’s house and bring a six-pack or something.”

Friends want brunch? Host a potluck, rather than spending $20-plus at a restaurant. If your friends insist on going to bars, only go during discounted happy hours.

Put your savings on autopilot

One way to make sure you save is to set up automatic withdrawals. This can be either a direct transfer from your checking account to your savings or with the help of an app like Digit or Acorns. “Digit watches my spending to see how much I spend and then saves a little bit away and updates me every day on my bank balance,” says Ariel Davis, an editor in New York. Acorns, on the other hand, takes a set amount of money out of your account each week, then invests it into mutual funds, stocks or electronically-traded funds of your choice.

Be honest about your spending

If you want to start ramping things up beyond putting one percent of your salary in your 401(k) or $10 a week in your savings account, you’re going to need to take a closer look at your overall spending. That means writing down everything you pay for each day. You can do this using a simple spreadsheet like Google Sheets or with your phone’s notes app. If you want help, apps like Mint, Personal Capital, and You Need a Budget make it easier to track your expenses by linking to your credit cards and bank accounts.

Once you see how much you spend on clothes in a typical month, for example, you may decide to cut back. Or you may decide to move to a less expensive apartment to save on rent. There is no single right way. It’s up to you to figure out your priorities and decide where you are most willing—and motivated—to cut back.

Tackle your debt

A big reason people can’t save is because they’re making debt payments. While some debt, like student loans, can be tough to avoid, knocking out high-interest credit card debt should be a priority. With average interest rates around 17 percent annually, and the young person carrying a balance of about $5,800 on their cards, you could easily wind up paying $1,000 a year in interest alone.

Wiping out your debt, or even a small chunk of it, could enable you to put the money you currently pay in interest into a savings account instead. Certified financial planner Roger Ma recommends putting any extra funds toward the credit card with the highest interest rate first. But if you think you’ll get more satisfaction from knocking off at least one bill altogether, put extra money (that you’ve saved from bringing your lunch to work and canceling that gym membership) toward the card with the lowest balance to start a snowball effect.

Try a ‘no spend’ month

Now for a power move: “Only spend money on bills and (true) necessities for 30 days in order to catch all your daily habits (and save money in the process!),” J. Money, the personal finance expert behind the blog Budgets Are Sexy, recommends.

Understanding the difference between wants and needs is a powerful way to get your spending in check. It’s not about denying yourself month in and month out; It’s about learning where you could cut back if you have a big money goal in mind like erasing your credit card debt or saving for a trip.

Keep your money safe

As for where to put all the money you’re saving now, you’ve got options: an interest-earning savings account, a 401(k) with your employer or an IRA you set up yourself. A savings account is best for short-term savings and an emergency fund to cover unexpected expenses. Thanks to rising interest rates you can earn about two percent annual interest at some banks.

For retirement savings, use your company 401(k), not only because you can have the deductions taken straight from your paycheck, but also because your company may very well match your contributions, which is free money.

IRAs work well if you don’t have an employer-sponsored retirement account. You can open one from Fidelity, Vanguard, and many other financial institutions and transfer funds from your checking account into your IRA.

Of course, if all that’s out of reach, remember that every dollar saved when you choose to bring your lunch today or buy a dress on sale next week, is a gift to future you. “That stuff adds up,” says Liou. “And when you save and invest it on top of saving, it compounds over time.”